The overriding emotion provoked by the news that Canada and the United States have reached a tentative deal on a renegotiated North American free-trade agreement should be one of relief. Our negotiators, led by Foreign Affairs Minister Chrystia Freeland, have restored a modicum of certainty to Canada’s trade-dependent economy. The details of the United States-Mexico-Canada Agreement (USMCA) need to be better understood, and will be with time. But, for the moment, a storm has passed.
What should not be forgotten in this moment of calm, however, is that the storm was the invention of one man. Canada has concluded an unnecessary and absurdly belligerent negotiation that was provoked by Donald Trump and impelled by a collection of outright lies about NAFTA that the U.S. President repeated ad nauseum.
No, NAFTA was not the cause of the decline of American manufacturing. No, the United States does not run a trade deficit with Canada. No, America wasn’t poorer for the deal, and no it wasn’t the worst trade agreement in history.
But Mr. Trump said all these things while campaigning, and his disinformation tapped into a populist, anti-trade wave that he rode to victory. Once elected, he kept his promise to give notice of his intention to pull out of NAFTA, provoking the renegotiation and the year-long, high-stakes drama that led to Sunday’s deal.
As such, it is hard to analyze the proposed USMCA in traditional terms. The narrative of a last-minute reprieve for NAFTA, reached by Canada to avoid the threat of additional tariffs and continental isolation, is simplistic.
It overlooks the fact that few in the United States were in favour of ending NAFTA. Business leaders and their associations were appalled by the prospect of seeing their intricate supply chains upended. Members of Congress and state officials, both Republican and Democrat, were also dead set against the end of the agreement, fearing the pain it would inflict on the many states that rely on the Canadian market.
As well, Mr. Trump’s punitive steel and aluminum tariffs have been just as hurtful to many American companies as they have to Canadian ones. His threat to harm the Canadian auto industry with 25-per-cent tariffs would have been disastrous for American interests, too.
And yet, he managed to create and sustain the fiction that, if Canada and Mexico failed to reach a deal filled with concessions acceptable to him, he was willing to walk away, destroy the economies of the northern states the Republicans need in order to win a general election and impose punitive sanctions that would cause almost as great harm to the American economy as they would to those of its NAFTA partners.
That fiction has been exposed for what it was by the fact the USMCA deal was reached at the 11th hour of a deadline that had political implications for Mr. Trump. He ostensibly needed an agreement by Oct. 1 in order to get it signed by the outgoing Mexican President before he leaves office on Dec. 1, but in reality, he needed it so he could boast he’d kept his promise to end NAFTA during the upcoming midterm election campaign in his country.
Canada did well to hold out until Sept. 30. It took nerve but, by doing so, it won key concessions, such as the preservation of the dispute-resolution mechanism in Chapter 19 of NAFTA, protections for cultural industries and protection against tariffs on auto exports, as well as the right to export even more cars to the United States.
Canada’s chief concession was the only thing Mr. Trump was stuck on: getting greater access to our dairy, poultry and egg markets. This is something the Trudeau government will have to manage politically, but it doesn’t amount to the end of Canada’s agricultural supply-management system.
Mr. Trump doesn’t care about what he didn’t get, though. He only cares about what he can boast about: that he “killed” NAFTA, the proof being that NAFTA has a new name, and that he stuck it to nasty old Canada and its high dairy tariffs. He can also rightly say that his negotiators wrung concessions from Mexico that should eliminate some of that country’s competitive advantage as a low-wage zone.
He has thus reached the end of Season 1 in the reality show that is his presidency, with the climactic ending he wanted. Canada and Mexico had no choice but to play their bit parts, and must now do an accounting of the outcome.
Canada, at least, held its ground in a thankless role. But Season 2 could start any minute.